FRC: Investigation opened into the audit of the financial statements of Mitie Group plc

An investigation into the audit by Deloitte LLP of the financial statements of Mitie Group plc has been announced by the Financial Reporting Council (FRC).

The investigation, carried out under the FRC’s Audit Enforcement Procedure, will look at whether there have been any breaches of Relevant Requirements in relation to the Statutory Audits of the consolidated financial statements of Mitie Group plc for the years ended 31 March 2015 and 2016.

Notes to editors:

The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.

To meet its responsibility as the competent authority in respect of audit enforcement, the FRC operates the Audit Enforcement Procedure. This procedure applies to the investigation and sanctioning of breaches of the various requirements of the statutory auditors of Public Interest Entities (PIEs) and any other cases retained by the FRC including AIM companies with a market capitalisation in excess of €200m. In brief, the stages of the Audit Enforcement Procedure are:

Initial case examination and decision to investigate

Investigation

Decision by Executive Counsel as to whether to issue a Decision Notice (a notice with the findings and recommended sanction);

Referral to Enforcement Committee and decision by the Enforcement Committee whether to issue a Decision Notice; and

Referral to a Tribunal.

In order for a matter to be referred for investigation by the FRC’s Executive Counsel under the Audit Enforcement Procedure, the FRC’s Conduct Committee is required to decide whether there is good reason to investigate an Allegation in relation to a Statutory Auditor and/or a Statutory Audit Firm.

Investigations are conducted by Executive Counsel and the Enforcement division.